How San Francisco's Progressive Policies Are Hurting the Poor

In recent years, a contradiction has unfolded in San Francisco. On the one hand, the city continues to practice progressive economic policies. But rather than helping its poor and middle-class—as such policies are advertised as doing—these groups in San Francisco have become more unequal, downwardly mobile, and altogether priced-out. This raises the question of whether the policies themselves are contributing to the problem.

First, though, it's worth noting the magnitude of the city's inequality, which is problematic not so much because the rich have gotten richer, but because everyone else has gotten poorer. This was determined by a Brookings Institution paper earlier this year which found that between 2007-2012, San Francisco trailed only Atlanta as the nation's most unequal city, with the top 5 percent of households earning average incomes nearly 17 times higher than the bottom 20 percent. During this period, inequality grew far more quickly in San Francisco than in any other U.S. city, with incomes for those top households increasing by nearly $28,000 to $353,576, and incomes for the bottom 20 percent decreasing by over $4,000 down to $21,313. But other brackets were hit also, as incomes declined for the bottom 80 percent of households, meaning those making up to $161,000. The study validated media narratives about how gentrifying San Francisco had become exclusive to the rich at everyone else's expense.

A lot of the reason for this shift is because of the tech industry's emergence. Once confined to the southern part of the region, Silicon Valley's imprint expanded across the city throughout the 2000s, and is now a mainstream cultural force. Not only have businesses like Twitter opened offices downtown, but once-working-class areas like the Mission provide housing and start-up space for industry workers, causing an influx of new wealth and neighborhood disruption.

But the city's progressive tendencies seem only to have worsened this shift, with an over-reaching government that offers inadequate—or plain wrongheaded—solutions to problems.

This is most evident in the way that it has handled housing. San Francisco now has one of the nation's most expensive markets, with median home prices at $1 million. Numerous explanations have surfaced for what caused the spike, ranging from the area's growing population and wealth, to its land constraints. But the spike can also be explained by regulations that discourage new housing. For example, lots within the city's downtown, where infrastructure is already in place to handle added population, are held to severe height restrictions, and this is even more the case in outlying neighborhoods. The structures that are built endure robust approval processes that can take years, and require millions in lobbying—creating expenses that get passed down onto customers. The developers of the proposed Washington 8 condo project on the downtown waterfront, for example, waited eight years and spent $2 million on campaigning only to have their project rejected.

The political establishment's response has been to impose anti-market forces onto the housing that does exist, under the impression that this will keep prices down. Three-quarters of San Francisco's units are rent-controlled because of a law that requires this for buildings constructed before 1979. Mainstream economists have long believed that such laws are counterproductive, because they encourage price spiking of market rate units, and under-maintenance or abandonment of the regulated ones. This has been the case in San Francisco: Along with laws that make evicting bad tenants difficult, rent control has prevented landlords from collecting the necessary fees for upkeep. As a result, they have left vacant an estimated 10,600 units, or 5 percent of citywide housing stock.

San Francisco's labor laws, also designed to help the poor, seem similarly counterproductive. In 2003, the city mandated a minimum wage of $8.50 per hour, with future increases tied to inflation. Later laws forced large businesses to also provide health care and paid sick leave. This has brought baseline hourly wages to roughly $13.12, with proposals to increase it to $15. But it's unclear whether the existing measure has been beneficial, or merely offset itself by raising living costs. A University of California, Berkeley, study showed that the law led to higher prices at restaurants, and it stands to reason that other low-wage industries were similarly affected, thereby causing inflation, but not necessarily any newly-created wealth. Indeed, in the decade since the law took effect, San Francisco's Consumer Price Index increased faster than any other Bay Area county. According to a Governing Magazine cost-of-living calculation, the purchasing power of $1 in San Francisco is 40 percent less than in cities like Houston and New Orleans.

Another thing jacking up prices is high taxes. San Francisco ranks ninth-highest out of 107 major cities in sales tax rates, with a combined state, county, and local rate of 9.5 percent. Although state laws have limited property tax rates to about the national average, San Francisco has a complex arrangement of business fees and taxes that can reach .65 percent of gross receipts. Residents also pay a flat income tax of 1.5 percent, in addition to a California income tax rate that can reach 13.3 percent, the nation's highest.

These taxes pay for government services that, in another ode to progressivism, are famously inefficient because of monopolistic union control. The San Francisco Municipal Transportation Agency and Bay Area Rapid Transit, the two main public transportation agencies, have some of the nation's highest-paid transit workers, although the former has dismal performance ratings, and both have gone on strike in the last 13 months. Other government unions have defeated ballot initiatives to reform an expensive public pension system that is crippling the city's ability to provide services.

But perhaps the ultimate mark of a progressive city is that it relies on the government, rather than private industry, to micromanage economic outcomes. In San Francisco, this has produced a regulatory and administrative style that favors certain businesses—and demographics—over others. The creation of something called PDR zoning allowed the city to impose costly fines on white-collar start-ups for using office space that it wanted available for "light industrial" craftsmen, who are presumably more authentic to the nouveau riche. The city-run cab industry, meanwhile, has long crowded out new drivers, and private options like Uber, in order to protect existing medallion holders. Other disruptive urban innovations, such as food carts, micro-housing, and Airbnb, tremble under hawkish government oversight while large tech companies have received millions in tax breaks to locate in neighborhoods that were already revitalizing.

These policies do not seem to have hurt San Francisco's growth, thanks to engrained advantages like a good climate, interesting culture, and proximity to educated workers. But those studying the causes of inequality should note the uneven nature of the city's growth: While overall population has boomed since 2007, middle-class population has declined, and the share of poor households moving to the suburbs has increased, suggesting that the next step after income loss has been exile. Progressive economic policies—or at least the way they are applied in San Francisco, without apparent knowledge of government bureaucracy's pitfalls—have contributed to the trend. Those policies have caused higher taxes and living costs, poor services, regulatory barriers to entry, and a loss of economic freedom. This creates a system that the rich can endure, and sometimes exploit to their benefit, but that poorer people cannot abide, helping to explain San Francisco's further plunge into stark class division.

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122 responses to “How San Francisco's Progressive Policies Are Hurting the Poor”

In the case of places like San Francisco and New York, I’m not persuaded that the consequences are all that unintentional. I think a significant portion of the Progressive population knows on some level that their policies will keep the Peasants down, and think that’s just fine.

Sorry to disagree. I’m a progressive-minded person at the low end of the economic spectrum–not poor, but I doubt I’ll ever be able to afford a new car. I get by on Social Security, a small military pension, and a part-time job. I support progressive policies, though I understand they might not work out as planned; such is the curse of self-government. But I believe in self-government, which is a sticking point between progressives and those with a more market-based ideology.

As far as I can tell, progressives aren’t trying to impoverish anyone; we want everyone to be able to have a decent life. If it weren’t for Social Security–a progressive program if ever there were–I’d still be busting my ass 40 hours a week just to make ends meet. As it is, I can relax a bit in my greybeard years. Why anyone would think progressivism equals hatred for the poor, I do not get. Which is not to deny your implied assertion that there is in this country a ruling class. I just disagree that progressives are intent on supporting it. On the contrary: We want to cut the ruling class down to a size that will fit nicely into a modern self-governing society.

Two things. First, I find it interesting that you consider progressive “self-government” when the article is discussing items like “a regulatory and administrative style that favors certain businesses?and demographics?over others.” This is not self government, it is an elected official using coersion to control a private individual’s use of that individual’s property. Self-government would be allowing an unimpeeded contract to exist between an asset holder and one who needs an asset.

Though there are some bitter individuals on this forum, most folks here do not think tha progressives hate the poor. However, we will argue that many of the progressive policies have significant unintended consequences and hinder the poor from self advancement.

The problem with progressive policies is that they often require “top men” who decide what is in charge of who, to control the flow of money, and to impose their findings/opinions/beliefs on others.

This is what is meant by a ruling class: people who have the power to coerce others to act, or think, against their will.

(By the way, before you start talking about social security, please do a bit of research. In 1935, life expectancy for men, who could receive SS, was between 58 and 64, depending on what you read. It was not “grey beard” retirement, but for those who were expected to die in the near future.)

If you, and progressives in general, really cared about helping the poor, you would take the time to measure objectively whether or not the policies you promote actually help the poor, and you’d advocate against government policies and institutions that objectively harm the poor. Progressives would have abandoned the welfare state, the Federal Reserve, and would side with Republicans against green energy. The also would vehemently fight against militarism and empirialism as it’s the poor who dies fighting the wars.

Why do people always make the unsupported claim that without SS the saintly employer would simply raise your pay by the amount of the taxes?

People who die before they collect SS are sure screwed unless they have children under the age of 25 or become disabled. People who live past 70 collect more than they are ever likely to collect if they invested on their own and as the recent events indicate the thieves on Wall Street have no problem taking every dime you have ever earned and putting it in their pockets.

MarkinLA|11.10.14 @ 7:59PM|# “Why do people always make the unsupported claim that without SS the saintly employer would simply raise your pay by the amount of the taxes?”

Uh, because they’d have to if they wish to compete for your services? Are you indentured? ——————— “the thieves on Wall Street have no problem taking every dime you have ever earned and putting it in their pockets.”

Yes, so long as you agree to hand it over to someone who does so. Defending SS because you are poor at managing money is weak tea.

Why do people always make the unsupported claim that without SS the saintly employer would simply raise your pay by the amount of the taxes?

That’s not really how the claim goes.

The claim is that when you’re on the market, negotiating with an employer, your employer isn’t just looking at your salary. He’s looking at that, and the SS taxes he’ll have to pay on your behalf, along with all the other benefits. So, you have to be worth it, along with everything else, to get your job. It doesn’t magically become som “extra gift”. It’s not like it surprises them or something.

One hint is that, when people talk about raising taxes to cover any SS shortfalls, I haven’t frequently heard people float the idea of “just have employers pay more”. Anyone who can see past first order effects can understand the expected results: downward pressure on salaries to make up the difference.

Or, just imagine if everyone’s boss was suddenly required to give them $20,000 of food stamps a year. Do you think everyone’s salary would just stay the same?

The reason why people frequently talk about it, but don’t bother proving it to you, is because it’s so obvious. This isn’t really a point up for debate. Even thoughtful people who support the concept of SS get the point. And it kinda says a lot up front when someone bother’s challenging it.

Blah, Blah, blah, the employer does not look at that he looks at what the market for an employee is in the area and what you are willing to work for. Those taxes and benefits are the same for everybody in a specific line of work so you only need to discuss the salary. Are you really that stupid to trot out this idiotic “worth” meme.

I have worked as a engineer all my life. The idea that they calculate some “worth” or value is moronic. They have a task that must get done and they don’t have the people or talent to do it so they hire somebody. They have a salary band that they are willing to offer for a candidate and that is it. That band is based on the going rate for engineers in the area and what they think they can get people for.

The employer pays SS too so raising taxes to cover the shortfall also raises taxes on the employer or didn’t you know that.

If you knew anything you would not trot this stupid worth meme around any longer. What make an engineer in silicon valley “worth” 30% more than one in Austin Texas? Nothing does except that is what a company in silicon valley has to pay to get someone to accept the job.

People who live past 70 collect more than they are ever likely to collect if they invested on their own and as the recent events indicate the thieves on Wall Street have no problem taking every dime you have ever earned and putting it in their pockets.

Oh, so it’s like some perpetual motion machine, or a reverse pyramid scheme? Everyone just puts money in and gets more out, all for living past the age of 70, i.e., a good 8 years shy of everyone’s life expectancy?

Hell, let’s all just put all the money we scan spare into SS. The returns are so great. It’s like an investment, really. An investment with huge returns, where you pay in, and they tax other people so much more later on to give you more than you got taxed. Until we’re all rich, I guess. I had no idea paying to supplement the retirement of the richest demographic in this country was such a great investment opportunity. What are all these stupid corporations doing, trying this “economic activity” bullshit? Tax and spend is the way to go. Much less work.

People like you are always talking about how much better we could all be if we got our SS money and invested it. We had a period like that, it preceded the Great Depression. Guess what, the vast majority of people lost all their savings and their pensions.

That SS pays out more than it should is the fault of a overly generous government in the past when a lot of people contributed compared to those that received benefits. It will have to be adjusted in the future. However for the vast majority of people a forced saving system is necessary.

I find it hard to equate the desire to implement more progressive policies with wanting to “cut the ruling class down to a size that will fit nicely into a modern self-governing society.” The more things implemented by the government, the more there must be a ruling class to implement them.

The lowest retirement eligible grade is likely E-5. An E-5 pension after 20 years of Active Duty should be about $1,500/month. If you enlisted at age 18, and served 20 years, you collected this pension since you were 38 years old–24 years before early Social Security eligibility. Totaling about $430,000 in benefits before early Social Security eligibility, wile still potentially working.

If Active Duty, you have had healthcare through the military from the time you retired until Medicare eligibility at age 65.

Well. Hows this for progressive. The city of S.F has a law against people feeding the homeless. But yet says they care so much about them. S.F politics are fucking garbage. Liar Lee and his posse. I even told Pelosi to get the hell outa my shop b/c her crew was blocking the sidewalk. Cash paying customers couldn’t get into my shop due to her presents. Can’t stand that cunt.

San Francisco is simply too attractive to ever be friendly to what most of the country sees as ‘middle class’; too many people want to live here and the space is limited on 3 sides by water. But it’s likely half again as ‘unfriendly’ as it has to be as a result of those dim-bulb government edicts. Example: Earlier this year, the local rag devoted about half the front page to an article by the ‘architectural critic’ griping that too many houses are dark-colored, while the same day a columnist was bemoaning the lack of new residential construction. Imagine you, as a developer, considering where to build.You read that front page article and realize it is two supervisory votes away from requiring a lengthy approval process on what color you paint the place. Mr. or Ms. Developer, that 1/2 acre over in Danville is looking better all the time, isn’t it?

Washington DC real estate prices are now higher than SanFran, the highest in the nation. Housing prices in MD are absurd. I have to laugh to myself every time one of my co-workers pays 350k for a house that would be 100-150k in other states. If the DC real estate bubble ever bursts, they will be so far underwater that they’ll be looking up at the ocean floor.

I remember in Alexandria, sloopy and I checking out open houses in the area we were living in out of a sick curiosity to find 3 bedroom 1 bathroom 1,000 sq foot “houses” going for $350,000 to $400,000. I kind of wished we stuck around long enough to see the looks on the faces of the poor bastards buying these places when real estate collapses again.

Reason did a piece on a similar topic awhile back, how housing prices in SF are causing lower ranking drones and startups in the tech industry to seek housing elsewhere, specifically, Oakland. As the housing prices get more absurd in SF, the techies will move into Oakland and the current residents will be “encouraged” by owners and municipal government, to seek residences elsewhere.

Get real. There are thousands of houses in Oakland priced over a million dollars, including some incredible multimillion dollar clifftop estates. 3/4 of Oakland is beautiful hillside real estate, with panoramic views overlooking the Bay, most of which are better than you’ll get in most of SF. Oakland gets its bad rep from the lowlands, but most of it is quite desirable and very pricy. Same goes for much of Berkeley, which is the northern border of Oakland.

I always laugh at what the average person in the rest of the country thinks Oakland is like. Come see anything east of the 580 freeway (more than half the city), which is all priced like Playa’s MB spot. And don’t get me started on Piedmont.

Oakland isn’t all that bad. The politics suck. But as a city the people are nice and not as loony as the Berkeley crowd. My mortgage in East Oakland is only $932. A shitty apartment in Jack London is 2000. Alameda County as a whole blows ass.

We used to own a house in Twin Peaks and sold it, left to buy a big house on a wooded hilltop acre in a desirable SF suburb, and had money left over from the sale for remodeling and new furniture. Where we live now is actually quicker to downtown SF than when we lived in the middle of the city! If people think leaving the city is their worst nightmare, we’re very happy that they stay there.

Let’s begin the 2016 campaign season by calling Republican politicians by their true name: traitors. Enemies of the United States of America.

That’s a winning message. Just what the average American wants to hear: My enemies are treasonous and must be destroyed.

In 1981, the Republican Party embraced plutocracy and ushered in a thirty-year period where America’s working families were abandoned in favor of the rich. Inequality rose as middle class income and wealth declined. As corporate power increased, unions were systematically undermined. As CEO salaries soared, fewer families earned living wages. Reaganomics produced a warped and brittle U.S. economy, where more than two-thirds of our GDP was housing related: building, buying, and furnishing new homes or borrowing against existing homes in order to maintain a decent standard of living. In 2008, when the credit bubble burst, the debt-based consumption model failed, taking down first the housing sector and then the entire economy, resulting in catastrophic job losses.

Yes. Government home ownership policies had nothing to do with this. Absolutely nothing at all.

Ever heard of a person who uses a lot of words to say absolutely nothing? Here, let’s play a little game:

In 1981, the Republican Party embraced EVIL and ushered in a thirty-year period where BAD STUFF HAPPENED. EVIL rose as BAD STUFF HAPPENED. As EVIL increased, BAD STUFF HAPPENED. As EVIL soared, BAD STUFF HAPPENED. EVIL produced BAD STUFF, where more BAD STUFF HAPPENED. In 2008, when BAD STUFF HAPPENED, resulting in BAD STUFF.

That’s the mess SAVIOR Obama inherited — the BAD STUFF of Republican EVIL. In 2009, there was NOT-BAD STUFF and (some) Republicans worked with Democrats to pass NOT-BAD STUFF. Then Republicans DID BAD STUFF.

From that point on, Republicans did BAD STUFF. Republicans became EVIL and blocked NOT-BAD STUFF. In the face of this, SAVIOR Obama with the support of the Federal Reserve did NOT-BAD STUFF.

Actually, i grew up with a lot of Quaker ‘friends‘ in the community (my mom taught at one of their schools in NYC and there was a meeting house nearby that a family friend belonged to)

They are by and large the most hardcore of the progressive ilk. Combine the self-righteousness of the religious with the self-important dippy do-gooder-ism of the socialist, and you get Quakers. They are the people who do the hard-labor in paving the road to hell.

I suspect it’s a fad where “exotic” religions attract people who are already marginal (or desire to think of themselves as marginal and cutting edge, not that libertarians are immune to this). Thus progressives flocking to zen buddhism or yogis, which in their rich histories are about as far from western progressivism as you can imagine. Strange bedfellows.

Re: the Mennonites, I’ve known rural communities of Mennonites my whole life, and they are about as far from the aggressive authoritarianism of progressivism as you could imagine. This has to be a regional or sectarian difference, kind of like how many Catholics are die-hard social gospels dweebs while others turn into Lew Rockwell. They might share the same faith, but that’s mostly incidental to the underlying political impulse.

Hi Knarf, I know Mennonites as well… Some are very “Orthodox” or “Old Order” as they call themselves, driving horses and buggies, like “Old Order” Amish, that they are historically related to. They do not have electricity either, and do not vote. These tend towards conservatism, and PROFOUND skepticism towards government. They are pacifists, and have historically served jail terms rather than serve in ANY military capacity, not even in military hospitals, for the most conservative ones among them. Then the more modern ones are often pacifists also, but “in your face”, activist, protest-rally-attending pacifists, rather than simply not obeying the draft, and leaving it at that. The modern ones, yes, there is a lot of “proggy” idiocy amongst them? I know some “pacifist” modern Mennonites rather well, who are devout Dems, and it amuses me that they supported Uber-Warrior Emperor Obama, a war-monger just like the rest of them? I have never challenged my Mennonite friends on this? Ya never change people’s minds on things like this anyway?

I’m a San Francisco refugee. Beautiful city, good food, extremely walkable, etc., but the costs are simply astronomical. Unless you got an apartment in the 90s (or are illegally subletting one), rent sucks. As in you are lucky to pay $2500 for a studio in a basement sucks.

Not that I’m in favor of what they are doing, but SF is sort of an experiment – an edge case experiment so not worth considering except for maybe the DC area or NY? The money keeps coming from tech, so what is eventual outcome? Poorer people will simply continue to move out and commute. The cycle will continue until what?

Actually Detroit was a manufacturing city with a semi-skilled work force. Moving production was easy. Google has a lot of specialized talent who can afford to stay in SF. Google can’t just up and leave if the people are really against moving.

At Hughes Aircraft Company we had a similar situation in the 90s. The CEO of Hughes wanted us to move to our manufacturing facility in Tucson. The engineers did not want to go and the management of the division refused to go along until they were practically ordered to move. It was messy, extremely costly, and they lost a lot of good talent. Smem of it was able to go to other Hughes divisions. A lot just went out the door. Google leaving would just mean some other silicon valley company would get that talent.

I think this article nails it. I live in San Francisco and as a software developer in a tech startup, I can afford it. It’s impossible not to notice the growing divide between the haves and have nots, and unfortunately I doubt the politicians of this city will bear the brunt when the shit hits the fan.

my best friend’s half-sister makes $81 hourly on the internet . She has been out of work for nine months but last month her paycheck was $19645 just working on the internet for a few hours. this link…..

Every solution to every problem presented in this article can be found in Henry Hazlitt’s “Economics in One Lesson.” I read that book sophomore year of high school and my economic philosophy has never been the same.

Thomas Sowell has written for years about San Francisco’s black population declined over the past few decades thanks to being priced out of their neighborhoods. He also wrote that the when the Army gave up the Presidio, the space could have gone to build housing but is now more “green space”, alas. San Francisco reminds me of Paris, where the rich live in the city proper and the poor live in the suburbs. That is the opposite of most North American cities.

Blacks aren’t declining because they are priced out of a neighborhood. They voluntarily leave when they are offered a lot of money and if they don’t have a very high income can never come back.

This whole article is bogus. SF has limited real estate and has a very real earthquake danger which limits what you can do with the land. The wealthy do not want the city to look like a Tijuana slum and are willing to limit their options to keep it that way. This in no way hurts the “poor” since none of them can afford to do anything but visit. Why is it important to have the poor around anyway.

I realize the place is full of self-righteous do-gooders claiming to care but scratch any one of them and you find a self-serving member of the professional grievance class making a buck off the poor as their advocate for a nice cut of the grant.

San Fransisco wishes for all the “poor” to move to Oakland and leave the city to the wealthy. Yet again, proof of progressives claiming one thing and doing another. Income inequality and fair housing is essential until it affects them, then suddenly it is a non-issue.

II. When the cost of production increases the business is forced to either reduce cost or increase prices. (See: Purchasing Power Parity and how the the famed $15/ hr wage is in reality $10)

III. What happens to employees that get to what the minimum wage will be through hardwork and education? I wonder what an assistant manager will feel like when he gets $15/hr but now do to new laws a newbie makes the same???

II. When the cost of production increases the business is forced to either reduce cost or increase prices

Why should society subsidize your hamburger? If an employee cannot live on the wages paid and becomes a welfare case then the wages are too low. This is the magnet for illegal aliens. If this business closes we all benefit as jobs for illegals dry up.

I don’t know, and that hasn’t been proposed. Why don’t you ask a question related to the post? ———– “If an employee cannot live on the wages paid and becomes a welfare case then the wages are too low.”

The employee can find a job that pays or move to a place where it costs less to live. No one is “forced’ to become a welfare case. Are you a practicing ignoramus, or just in training? ————— “This is the magnet for illegal aliens. If this business closes we all benefit as jobs for illegals dry up.”

No but it is obvious your head is so far up your ass you can see the small intestine. People making minimum wage are eligible for welfare and certainly don’t make enough to pay for rent, a car and food.

Fuck you too you pathetic corporate ass licking queer. What do the Koch Brothers dicks taste like after they pulled them out of your ass?

It seems that the Progressives are all about Good intentions, not so much on actuals results and bonus points for attacking problems with other people’s money. They don’t seem to handle reality very well though.

The solution here is to not live in San Francisco, NYC, Boston, or the D.C. area, unless you are earning a household income of at least $350,000. If you can earn a household income of $250K in Dallas, Phoenix, or Atlanta, you are as well off as earning a household income of $350K in SF, NYC, or DC.